Greek talks collapsed amid anger, insults, “unreality”

posted at 9:21 am on May 21, 2012 by Ed Morrissey

This may end up being the political quote of the year, uttered by the president of Greece after talks aimed at forming an emergency government collapsed last week:

“Gentlemen, we are finished,” said the patrician President, calling an abrupt halt to two hours of baiting and cat-calling between furious Greek politicians. “I’m starting to get upset myself now. We are finished.”

The final collapse of talks to forge a new Greek government triggered repeat elections and fears of a chaotic exit from the euro zone. But it is the manner of that collapse, the acrimony and rancor cited by Karolos Papoulias, that bodes ill for efforts after June polls to pull Greece back from the brink.

“It was a complete madhouse,” a source at the socialist PASOK party told Reuters after their leader,Evangelos Venizelos, returned from the May 17 showdown. “The discussion was unbelievable.”

The only people who don’t seem to realize the depth of the truth in that quote are the Greeks themselves:

Voters infuriated by grinding poverty, spending cuts and corruption, punished Samaras and fellow mainstream party leader Evangelos Venizelos. Leftist Alexis Tsipras, 37, emerged with the power to block them. Greece, he said, could ditch its spending cuts and renounce its debts to EU partners, yet enlist their help in keeping the euro currency some 80 percent of Greeks cherish.

“Pythagoras didn’t manage to square the circle and god knows these guys don’t know how to either,” said one EU diplomat in Brussels, echoing widespread sentiment in European capitals.

“The Greeks seem to have no understanding of the seriousness of their predicament and that is a great source of frustration. There’s a breaking point and I think we’re getting close to it.”

Just how unreal is Tsipiras? Today he’s assuring Europe that he wants to stay in the Euro, but without the austerity conditions on Europe’s rescue of Greek insolvency:

The charismatic Greek leftist who could determine the fate of the euro begins a tour of European capitals on Monday carrying a single message: it’s time to talk.

In an interview on the eve of his first visit abroad since his surprise rise in a May 6 election, Alexis Tsipras veered occasionally into the combative rhetoric that has seduced disaffected Greek youthand alarmed Brussels and Berlin.

Tsipiras is touring Europe, but he’s not meeting with government officials. Instead, he will meet with leftist organizers in France and Germany, apparently to build political pressure on both governments to end the austerity conditions and convince them to hand Greece billions of Euros for more “stimulus.” France just elected Hollande, so they might be sympathetic, but Germans have supplied the main part of the money for Greece’s bailouts, and they’re tired of being the EU’s ATM.

The leaders with whom Tsipiras is not meeting offered this warning — if Greece doesn’t accept the austerity conditions, they are finished:

European leaderssay that if the next Greek government spurns the bailout, they will have no choice but to cut off funding, which would effectively bankrupt Greece and force it out of the euro. The prospect sent the single currency tumbling last week and hurt the bonds of Spain and Italy, countries that could be next in the firing line if Greece collapses.

One way or another, the bill is coming due. The “disaffected youth” of Greece are about to learn that their profligacy isn’t going to be subsidized forever, and it might get very, very ugly in the birthplace of democracy. Given the propensity of their military over the last several decades to seize the reins of power, these politicians might truly be finished if they don’t get serious quickly.

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I’ll grant you that doubling GDP in 30 years isn’t nearly as difficult as it appears to be. That’s a little over 2% a year, but the truth is we don’t have 30 years so growing out of this isn’t an option.

DFCtomm on May 21, 2012 at 11:03 AM

Why isn’t it an option? Are we in danger of being unable to service our debt? Because the only thing we need to do is service the debt. We don’t need to pay it down. And balancing the budget would require entitlement reform. So why is outgrowing the debt not an option?

My lefty friends claim that the collapse of 2008 and the current malaise can all be traced back to the Bush tax rates. Let CA serve as an example of the stupid of the “tax ourselves into prosperity” plan.

Why isn’t it an option? Are we in danger of being unable to service our debt? Because the only thing we need to do is service the debt. We don’t need to pay it down. And balancing the budget would require entitlement reform. So why is outgrowing the debt not an option?

NotCoach on May 21, 2012 at 11:07 AM

You aren’t getting a balanced budget amendment. That’s a pipe dream at the moment, so forget that. You aren’t even going to get 2% real GDP growth next year, or for the near future, so forget that. What you are going to be getting is the FED attempting to bail out Europe, and failing. Europe slides into the rabbit hole, then drags in the UK, then the U.S. and then China. You’re strategy could have worked in 2008, but the last, and largest bubble is getting ready to pop. It’s too late.

Because the only thing we need to do is service the debt. We don’t need to pay it down.

Usually bills have a final due date… If not, then you’re in a position of first paying interest (service) on the debt. If that debt prevents you from growing then you’re just working for the creditor who has a lot of influence on your spending decisions. Well, NotCoach, maybe not your decisions, but that interest payment is not available for support of the economy of the USA.

That’s the thing. We’ve already committed suicide. It’s as if you’re developing a plan to stop Humpty Dumpty from falling, but he’s currently in the process of falling. You’re too late. I’ll grant you that if we made some economically skilled person emperor then things might be saved. There would be pain, but we could avoid the worst of it, but we’re got gridlock not an emperor.

Usually bills have a final due date… If not, then you’re in a position of first paying interest (service) on the debt. If that debt prevents you from growing then you’re just working for the creditor who has a lot of influence on your spending decisions. Well, NotCoach, maybe not your decisions, but that interest payment is not available for support of the economy of the USA.

dahni on May 21, 2012 at 11:21 AM

Part of servicing the debt is renewing old debt to payoff obligations that come due. And our debt would not prevent us from growing in an economy friendly to economic growth. You also have to take into consideration our position relative to other nations. Despite our massive debt problems we still have the strongest financial position.

And we make interest payments now as part of our government finances. Why would the future be any different? Assuming there is no massive default of all nations the world over, we will continue to service our debt regardless of economic growth. Debt service is not a new phenomena. The issue here is getting spending back into the black even with our debt service payments. Currently our debt service is about $200 billion a year. Revenues minus debt service is what our thieving politicians would have to live with in a sane world.

And we make interest payments now as part of our government finances. Why would the future be any different?
NotCoach on May 21, 2012 at 11:29 AM

All our outstanding debt is composed of 30 year bonds issued on the very day your plan is put into action? However, under your plan we’d still owe every penny since all we’ve done is serviced the interested and doubled real GDP. What will the interest rates be in 30 years? We only need for interest on our debt to rise X10 for that servicing to consume every penny the government takes in. That sounds like a lot, but the current 2 year treasury bond rate is .3%, so it only needs to rise to 3% which isn’t even a high rate. You aren’t going to get 30 years of stability to grow your way out of this. It’s too late.

Higher interest rates would only occur on reissued debt, not currently outstanding debt. And we can still keep interest rates low because we are still the most stable game in town.

Look, you think we have gone over the edge. I don’t. Obviously we won’t agree.

NotCoach on May 21, 2012 at 12:00 PM

You’re plan doesn’t call for paying off debt. It only calls for servicing it, so we’ll have no choice but to roll it into new debt as the bonds mature. A 3% rate isn’t a bad rate but it’s enough to sink us, so that should tell you that your 30 year plan is unworkable.

This is getting closer to an explosive situation. Rhetoric quickly dissolves into conflict. It starts with Verbal and ends with tanks and troops.

Germany is fed up. Greece wants Europe to fund thier lifestyle… Think of how history is repeating itself. The EU is going to want guarentees for more loans. That is going to be backed up with hard valued assets. Like real-estate in Greece. When that bill comes due it will be war driven by the socialist in greece.

And in just a few years the interest payments on the debt will exceed $800 billion per year, and from there its exponential. Its a spiral straight to default.

BobMbx on May 21, 2012 at 12:14 PM

Debt service will exceed $800 billion a year if we continue our current deficit spending. Again, this only works if we balance the budget. The debt service is currently manageable for the long term as long as we stop adding to the debt.

The issue here is getting spending back into the black even with our debt service payments. Currently our debt service is about $200 billion a year. Revenues minus debt service is what our thieving politicians would have to live with in a sane world.

NotCoach on May 21, 2012 at 11:29 AM

It sounds like you believe the govt has any intention of getting spending back into the black. Can you give me one single example that causes this (please forgive the snark) rather glaring delusion?

All your assumptions seem to be based on this single point. Since I have not seen such an example, not even once, perhaps you can tell us how either party will get us there. I can assure you that the only way they will ever stop overspending money is when they finally have no choice. You and I both know what that means.

Just a bunch of children throwing a collective tantrum, and dragging the rest of the EU down with it.

Hey kids, playtime was over a while ago. Check, please.

And yet, we have mind-numbingly stupid liberal democrats in positions of power all over this country, including the Socialist/Marxist in Chief, who are running toward this ideology while the rest of Europe is trying to run away from it.

Debt service will exceed $800 billion a year if we continue our current deficit spending. Again, this only works if we balance the budget. The debt service is currently manageable for the long term as long as we stop adding to the debt.

NotCoach on May 21, 2012 at 12:17 PM

I’ll leave you alone after this, but your plan makes too many assumptions of stability when the world is so obviously becoming unstable. It is too late.

And how do you do that when the government already knows it has to spend ~$60 – $130 trillion in the next 75 years that is has no idea where the money is going to come from?

And those unfunded liability numbers are based on some pretty rosy and steady growth projections, and don’t include ObamaCare costs.

Its fantasy to think otherwise.

BobMbx on May 21, 2012 at 12:23 PM

We are on the hook for those kinds of sums if we refuse to reform Medicaid and Social Security, but there is an easy fix for both. We just need the will as a nation to adopt the fix. Shift the cost burden from the government to private citizens. Give a tax credit for the elderly to purchase their own health insurance and privatize Social Security.

It sounds like you believe the govt has any intention of getting spending back into the black. Can you give me one single example that causes this (please forgive the snark) rather glaring delusion?

All your assumptions seem to be based on this single point. Since I have not seen such an example, not even once, perhaps you can tell us how either party will get us there. I can assure you that the only way they will ever stop overspending money is when they finally have no choice. You and I both know what that means.

runawayyyy on May 21, 2012 at 12:19 PM

I am outlining a solution, not a position of faith. I don’t believe it is too late (yet), but I do believe we can still turn the ship around. And I am not putting my faith in politicians to steer the ship without us holding a gun to their heads.

It means that instead of the government being the guarantor of payments, the private sector is. If Medicaid recipients are buying private health insurance the government is no longer reimbursing for medical treatments, the private insurer is. If Social Security is privatized the government is no longer mailing checks to retirees, the private savings account is.

Higher interest rates would only occur on reissued debt, not currently outstanding debt. And we can still keep interest rates low because we are still the most stable game in town.

NotCoach on May 21, 2012 at 12:00 PM

The Federal Reserve buys almost 70% of our debt. We are monetising our debt. When the market stops buying the rest, it will come on very quickly. It will not be a slow process. Read about the Weimar Republic and Mugabe’s Zimbabwe.

Under what circumstances would we suffer such hyper-inflation? We are not the Weimar Republic or Zimbabwe. We are the largest economy in the world with the most financially stable markets. I don’t pretend things cannot become a total disaster if we do nothing. But if we balance the budget, reform entitlements and get the government out of the way of the private sector I do believe we can outgrow our problems.

Get back to me when we become a 3rd world dictatorship (relative to the rest of the world) or a post-war disaster under the yolk of a ill-conceived treaty.

Why are we arguing? You think it’s too late, I don’t. I have outlined what I believe to be a reasonable course of action if it isn’t too late. You believe it’s too late. I think we both understand each other’s position.

I am outlining a solution, not a position of faith. I don’t believe it is too late (yet), but I do believe we can still turn the ship around. And I am not putting my faith in politicians to steer the ship without us holding a gun to their heads.

NotCoach on May 21, 2012 at 12:33 PM

I realize you believe we can turn the ship around. My question was why. What evidence do you have that anyone in the govt has any interest in balancing the budget? I simply asked for one single example, and you didn’t give one. You’re being told it’s too late, and I understand you don’t want to believe that, but I think you know it as well as I do.

As for holding a gun to a politician’s head, could you perhaps put that into an idea that resembles reality? What exactly are you proposing? Since they’ve made it clear they don’t care one bit what we think about their behavior, what makes you think we have the power to affect it in even the smallest way? Again, please be specific. Outline exactly the form that “gun” takes, and why they will take it seriously “this time”. Thanks for your response.

But if we balance the budget, reform entitlements and get the government out of the way of the private sector I do believe we can outgrow our problems.

NotCoach on May 21, 2012 at 12:57 PM

You’ve clearly outlined 3 separate and distinct goals here. I submit to you that not one of them will be addressed in any serious way by the govt. Prove me wrong. Hell, give me one shred of evidence that they have any interest in even moving in the right direction on any of them. Just one.

I realize you believe we can turn the ship around. My question was why. What evidence do you have that anyone in the govt has any interest in balancing the budget? I simply asked for one single example, and you didn’t give one. You’re being told it’s too late, and I understand you don’t want to believe that, but I think you know it as well as I do.

runawayyyy on May 21, 2012 at 1:01 PM

I have no faith in politicians. I have no example of any politician (other then Rand Paul and to a lesser extend Paul Ryan perhaps) having enough sense to do the right thing. Politicians buy votes. I only have the hope that Americans will stop selling their votes and hold these people accountable. I would never rely on any politician doing the right thing without being held to account by the voters. I just simply believe that we, as a nation, can solve the problem before it is too late. I am sure that many would consider me to be an optimistic fool.

As for holding a gun to a politician’s head, could you perhaps put that into an idea that resembles reality? What exactly are you proposing? Since they’ve made it clear they don’t care one bit what we think about their behavior, what makes you think we have the power to affect it in even the smallest way? Again, please be specific. Outline exactly the form that “gun” takes, and why they will take it seriously “this time”. Thanks for your response.

Why are we arguing? You think it’s too late, I don’t. I have outlined what I believe to be a reasonable course of action if it isn’t too late. You believe it’s too late. I think we both understand each other’s position.

NotCoach on May 21, 2012 at 12:59 PM

On this I agree, but would you do me a favor? You can continue to hope for the best, but will you put in some work to prepare for the worst?

It means that instead of the government being the guarantor of payments, the private sector is. If Medicaid recipients are buying private health insurance the government is no longer reimbursing for medical treatments, the private insurer is. If Social Security is privatized the government is no longer mailing checks to retirees, the private savings account is.

NotCoach on May 21, 2012 at 12:41 PM

If you suggest that dismantling SS, MediCare, and MedicAid will prevent the default of the US, I would say you are correct. And we’re shoulder to shoulder on that point.

Give me the odds of that happening. Its one thing to see a path to victory (even the last guy in line at the Indy 500 has hopes of winning), its completely different in actually achieving the lofty goals.

As others have indicated/asked, on what evidence are you pinning your hope on?

I do not understand how any sentient being could believe a nation could live largely off the largess of others far away forever…Heck, it is not simply ‘live’, but live very comfortably on the work of others.

I have no faith in politicians. I have no example of any politician (other then Rand Paul and to a lesser extend Paul Ryan perhaps) having enough sense to do the right thing. Politicians buy votes. I only have the hope that Americans will stop selling their votes and hold these people accountable. I would never rely on any politician doing the right thing without being held to account by the voters. I just simply believe that we, as a nation, can solve the problem before it is too late. I am sure that many would consider me to be an optimistic fool.

NotCoach on May 21, 2012 at 1:07 PM

You’ve now put your finger on the problem….the people who keep voting for these crooks. I’ve said it before and I’ll say it again, what we’re seeing is our fault. We did this to ourselves. You have more faith in the people than I do. I have about as much faith in them voting for (enough) people who will do the right thing as I have in the govt ever doing the right thing, i.e. no faith at all.

However, I hope you keep that faith as long as you possibly can. It’s too late for me :(

If you suggest that dismantling SS, MediCare, and MedicAid will prevent the default of the US, I would say you are correct. And we’re shoulder to shoulder on that point.

Give me the odds of that happening. Its one thing to see a path to victory (even the last guy in line at the Indy 500 has hopes of winning), its completely different in actually achieving the lofty goals.

BobMbx on May 21, 2012 at 1:28 PM

We wouldn’t need to dismantle these programs if we shift the cost burden. Restructuring, but not eliminating, is much more palatable to Americans.

As others have indicated/asked, on what evidence are you pinning your hope on?

I am placing my hope in the American people. Evidence of whether or not that hope is misplaced will just have to wait.

He means not, unlike today, limiting the thieving of government to half the population but seeing that rapacious government steal from almost every citizen…ie; the pain becomes non partisan and everyone suffers. That is the essence of the economic argument today. One side believe pain should be limited to folk mostly on the other side (the evil rich=middle class) while the other side believe the pain should be spread far more widely to cover the various victim groups who live off the folk who do pay taxes.

Socialism works only until socialists run out of other people’s money. Socialist politicians–whether in Greece or California–will continue to thrive so long as there is still a way for them to distribute money from producers to parasites. These people are clueless about what to do when redistribution is no longer an option. They have no plan, because their ideology doesn’t include a method of creating wealth.

Socialist parasites are a lot like spoiled teens. Nothing is going to wake them up except being thrown out of the house so that they’re forced to make a living on their own.

Under what circumstances would we suffer such hyper-inflation? We are not the Weimar Republic or Zimbabwe.

Have you noticed the enormous expansion in M3 over the last few years? Quantitative Easing and debt monetisation will lead to Weimar. You can’t continue to print money out of thin air without creating inflation and when you monetise your own debt, you are basically eating your own body to quell the hunger pains.

We are the largest economy in the world with the most financially stable markets.

The IMF predicts that China will overtake the US in 2015. Yes, we have financially-stable markets, but I must caution you not to fall prey to the fatal conceit that too many Americans have and that is that there is no other game in town. That was true from the end of WWII until the 1980s. It is no more.

I don’t pretend things cannot become a total disaster if we do nothing. But if we balance the budget, reform entitlements and get the government out of the way of the private sector I do believe we can outgrow our problems.

You will not only need to clean out Washington, but you will also need to change the thinking of tens of millions of Americans. I have seen this in my native land. Socialism doesn’t just kill countries. It kills humanity and individuals spirit.

Get back to me when we become a 3rd world dictatorship (relative to the rest of the world) or a post-war disaster under the yolk of a ill-conceived treaty.

There are other examples in addition to Weimar and Zimbabwe. Would you like them? I am talking economics.

Debt monetisation leads to the same place regardless of the type of political system that tries it.

Why isn’t it an option? Are we in danger of being unable to service our debt? Because the only thing we need to do is service the debt. We don’t need to pay it down. And balancing the budget would require entitlement reform. So why is outgrowing the debt not an option?

Thirty-one years ago, in 1981, the one-year Treasury reached its all time high of 14%

Ok, so 14% of 30 Trillion dollars is 4.2 Trillion dollars. Current Government revenue is 2.8 Trillion; so if you increase all taxes by 50% of their current value to help avoid a crisis, you can cover our interest in a worst case scenario and pay for NO entitlement, NO military, and NO Government of any sort. We’ll need something on the order of Tripling our taxes to cover our current spending plus that debt.

I’m guessing you’re hoping to avoid a worst case scenario?

A More common average Interest rate for 1970-2000 is 5%… so 1.5 Trillion would be required every year simply to service debt; HALF OF ALL CURRENT GOVERNMENT REVENUE.

Or do we just tack that onto the debt each year? If we add 3+ Trillion to the Debt each year we end up in significantly worse shape, don’t we?
But if we balanced the budget tomorrow; quit adding to the debt; and stuck at 16 Trillion and didn’t want to pay it down… we could still see (5%) 800 Billion (or 27% of revenue) to a worst case (14%) 2.24 Trillion (77% of revenue) required solely to service debt.

If they can’t balance under 3 Trillion now, what give any hope they could balance under 2 Trillion when interest rates hit a more common historical average?

You know, I got two things here.
1. Leftists on economics remind exactly of the Zombies from George Romero movies. They’re the ones that keep walking into a wall, or the wrong way up an escalator, or into the moving tail rotor of a helicopter, over and over and over again because they just don’t get it….because they’re Zombies….and they’re less than retarded.

2. Trusting that politicians can do anything to help the Economy, (or anything else for that matter) is like trusting a cat to put out a housefire; It’s just not what they do. Politicians don’t do much but spew stupid platitudes that stupid, lazy people want to hear to garner their vote. Ben Franklin was right when he said that when the people find they can vote themselves money, it will herald the end of the Republic.

Personally, I rather look forward to watching Greece and the Euro collapse. The whole experiment was an absolutely idiotic idea to begin with, and they get every misery their little socialist ideologies deserve. (Especially the French…haughty little pricks)

I do nothing but go about persuading you all, old and young alike, not to take thought for your persons or your properties, but and chiefly to care about the greatest improvement of the soul. I tell you that virtue is not given by money, but that from virtue comes money and every other good of man, public as well as private. This is my teaching, and if this is the doctrine which corrupts the youth, I am a mischievous person.
Socrates, quoted by Plato, ‘The Death of Socrates’

We are in a midst of a Greek Tragedy! Get the Ekkyklema to subdue the belly button of Europe!